Before people knew Bitcoin was the biggest invention since the internet, computer geeks who were informed at the time only required the simple working computer to mine bitcoins. Nowadays, everyone wants to get their hands on some BTC, creating a steep demand curve that has triggered the rise of mining difficulty.
Is It Possible to Mine Bitcoin at Home?
So, can you still mine Bitcoin and other cryptocurrencies from home? For other cryptos, the answer is absolute Yes! But Bitcoin? That could be challenging now because of the rampant increase of bitcoin miners. This increased rate of miners is making mining difficult.
Don’t get me wrong; I haven’t said it’s impossible to mine bitcoins at home. However, to deduce the possibility of succeeding, we will need to unravel the mining difficulty and why it is a big deal in determining what you can mine cryptocurrencies at home.
Several factors affect the profitability of mining crypto at home, one of the major ones being mining difficulty. The mining difficulty is a metric that shows how difficult it is to mine a block of crypto on the blockchain.
Bitcoin and other digital currencies use this difficulty to maintain the average time between blocks. This parameter helps prevent malicious attacks on the network since a high difficulty can also help secure the blockchain. In this case, let us have a deep dive into Bitcoin’s case, being the first digital currency both in the launch and market capitalization.
Bitcoin Mining Rigs at Home
If you are interested in mining Bitcoin, you should first know that it is only possible to buy a Bitcoin mining machine, which is referred to as an Application-specific Integrated Circuit device(ASIC).
These devices are incredibly efficient at mining Bitcoin. Introducing these devices in 2013 made all other methods of calculating mining equipment obsolete. If you are planning on mining Bitcoin using hardware such as GPUs, CPUs, or FPGAs, then look into different types of coins. Although these devices can mine BTC, they cannot handle the fast pace of mining Bitcoin, making it a waste of electricity and money.
Before the advent of ASICs, the best graphics card was the AMD 7970, which produced around 800 million hashes per second. Today, an average ASIC has about 100 trillion hashes per second.
When choosing which machine to invest in, miners should think about the machine’s profitability and longevity. For example, if you’re planning on mining bitcoin using a graphics card from an NVIDIA manufacturer, such as the RTX 3080, you can earn around $139 a month. However, by January 2022, the card cost increased to about $1,400.
On the other hand, a single S19 Pro mining machine can provide you with a projected profit of $17.79. However, since it’s only good for mining bitcoin, you’ll likely lose a significant portion of your earnings due to the electricity costs, noting that electricity alone will cost you about $10,000.
Due to the bitcoin price volatility, it’s hard to predict how long it will take you to recoup your money from purchasing an S19 Pro or an RTX 3080. Since the price of bitcoin has gone up and down in the past week, it’s possible to not make money from mining it for a long time.
In different countries around the world, the average price of electricity varies. In developed countries, for instance, Bitcoin mining is typically not financially viable. In residential areas, the electricity cost can range from $0.15 to $0.25 per kilowatt-hour.
Bitcoin miners usually operate in regions where electricity is cheap. These include China’s Sichuan region, Iceland, Russia’s Irkutsk region, and the US. These regions will typically have hydroelectric dams as their local electricity generation sources.
These regions are known to offer Bitcoin miners low electricity prices. For instance, they can expect to get around $0.06 per kilowatt-hour. It is typically enough to make a profit even during a market decline.
Although prices below $0.10 are generally recommended to maintain a successful mining operation, one should consider the location and circumstances of their operation when choosing a mining site. For instance, people in developing countries may not have to go far from the comfort of their homes as those in developed regions.
Aside from the hardware, the profitability of a mining company also depends on the market conditions. For instance, during a bull market, the price of Bitcoin can go up significantly. The company’s profit will increase even if the market conditions are unfavourable. The positive inflows from the bull markets are offset by the increasing profits Bitcoin miners enjoy. As a result, each miner now generates less BTC.
Eventually, the revenue stream started to generate equilibrium points, where the less efficient miners stopped earning as much as they used to. It would allow others to earn more Bitcoin, which usually does not happen immediately. There is a lag due to the lack of production capacity. For instance, Bitcoin prices can go up even though ASICs are not being made fast enough.
During a bear market, mining companies’ revenue is depressed until the miners stop using their equipment. To avoid being outgunned, Bitcoin miners need to find a combination of hardware and location that will allow them to maintain their competitive edge. Older miners must also reinvest their capital to prevent their profits from severely affecting the more efficient hardware.
What Coins Are Profitable to Mine at Home?
There are many different ways to mine cryptocurrencies at home. However, not every crypto is profitable to mine at home. As of 2022, here are the cryptos that you can mine at home and their market caps, apart from Bitcoin;
Ethereum (ETH) – 187B
Ethereum is considered one of the world’s most popular cryptocurrencies. It is still possible to mine it at home using powerful GPUs equipped with sufficiently powerful graphics cards. Home miners should acquire the latest graphics cards and join a mining pool to maximize their profits. This process is relatively simple.
The first step is downloading and installing the blockchain from the official website. After that, you’ll need to set up a wallet to mine Ethereum. You can also change the settings of your node to mine it. Some prominent exchanges that trade Ethereum are Binance, Bitfinex, and BTSE.
Ravencoin (RVN) – 294M
Ravencoin is a blockchain that aims to make assets move seamlessly from one person to another. It is a fork of the Bitcoin code. Its main improvements over Bitcoin are the one-minute block reward time, the number of coins issued, and the ability to develop and manage assets. However, it does not have a weighted distribution schedule.
The KAWPOW algorithm for Ravencoin is designed to be resistant to ASICs. It can be mined using a consumer-grade GPU. Once you have mined the cryptocurrency, you can trade it on exchanges such as OKEx, Binance, and Huobi Global.
Dogecoin (DOGE) – 9B
Although the concept of Dogecoin originated from a meme, it has since grown to be a popular altcoin. To mine it, you first need to have a wallet. You can download the core wallet or look for other suitable online wallets. Then, you will need a CPU Miner on your computer. This method can still be performed slowly, but it’s usually faster using graphic cards. To improve the mining speed, you can usually use graphics cards such as the ones made by NVIDIA or Advanced Micro Devices. If you’re planning on using GPU mining, the choice between the cgminer or the cudaminer is usually a must.
While it is possible to mine Dogecoin on your own, it is important to sign up for a mining pool to maximize your mining power and generate higher returns. One of the most popular mining pools that supports Dogecoin is the MultiPool. Once you have mined enough of the altcoin, it will be available on multiple exchanges such as Binance and OKEx.
Monero (XMR) – 2B
Monero is a popular digital currency. Its network is designed to prevent the development of specific types of hardware, such as those used by mining computers. This asset is also ideal for home mining.
Before you can start mining Monero, you must first download a wallet and software allowing you to store and manage your coins. It will enable you to use the mining software that supports the project, such as MultiMiner. Although MultiMiner is the most popular choice, other options are available online. Once successfully mined, you will transfer your Monero to multiple exchanges such as Bitfinex and Binance.
Some people believe that bitcoin is more efficient than using computers to mine it. For instance, Ethereum, considered the world’s second-largest cryptocurrency, heavily favours the use of graphics processors. However, this is not the case for long as it plans to phase out its miners as it moves toward an all-proof-stake system.
The Future of Mining Crypto at Home
So, what does the future of mining crypto at home look like? Although many experts believe crypto mining will still exist, it’s unclear if it will ever return to its former glory. As more time passes and more people join the blockchain as miners, the mining difficulty rises with time. Hence, it will become harder, especially for people mining from home, to make good profits or any profits at all.
In addition, in the long term, crypto mining might not even bring any profits at all. More blockchain cryptos networks are shifting to proof-of-stake(PoS), which does not lead to environmental degradation issues. For example, Ethereum is shifting to PoS through the Merger, which is expected to occur later in the year.
How long will It take to mine bitcoin?
It takes 10 minutes on average for a block to be confirmed in the Bitcoin blockchain. Every 10 minutes, a block reward is awarded to the miner who solves the crypto puzzle first.
How much money would I make per day mining bitcoin?
Bitcoin’s block reward was initially 50 Bitcoin. However, after around 210,000 blocks have been mined, the reward halves. This happens every four years. The current block reward of Bitcoin is 6.25 Bitcoin. With so many miners competing for the same number of blocks, the chances of getting a reward are very low.
Will I be able to get rich by mining bitcoin?
Even if you’re not a computer wizard, or have a warehouse full of computers, you can still get rich off of cryptocurrencies as long as the profitability is high with costs incurred such as electricity costs, mining machines efficiency and bitcoin price.
How profitable is mining bitcoin today?
Some people who are interested in Bitcoin mining can still make a profit from it. Equipment such as mining rigs are relatively easy to acquire, though the cost of competing equipment can vary. Some machines have adapted to meet the needs of their users. For instance, by reducing their energy requirements, they can lower their overall costs.
How hard is it to mine bitcoin?
Every two weeks, or every block in 2016, bitcoin miners get a reset on how hard it is to solve. On Friday, the code automatically made it more difficult to solve by 7.3%.
Although it’s not surprising that there has been a spike in difficulty, it is nonetheless a sign that the mining ban in China has started to have an impact on the industry. This is the first significant increase since the ban was implemented. Many of the miners who used to be in China are now finding new homes elsewhere.